This week featured a significant announcement from General Electric, namely that the U.S. Federal Aviation Administration (FAA) certified a 3D-printed manufactured part to operate within certain GE commercial jet engines.
A blog commentary featured on the GE Reports site indicates that a fist-sized piece of silver metal that houses the compressor inlet temperature sensor inside a jet engine, known as T25, is becoming a symbol of one of the biggest changes sweeping jet engine design. GE Aviation is currently working with Boeing to retrofit more than 400 GE90-94B jet engines with the 3D printed part. This family of engines power Boeing’s 777 commercial aircraft. High resolution photos of these parts are featured in the commentary.
The report further indicates that GE Aircraft has already initiated flight tests for the next-generation LEAP jet engine, produced in a 50-50 consortium with CFM International, which will include 19 3D-printed fuel nozzles. The LEAP engine will power Airbus’s newly designed A320neo and Boeing’s 737MAX aircraft models.
The planned GE9X engine will further be developed with 3D-printed fuel nozzles and other parts.
GE was one of the early adopter manufacturer’s that has embraced additive manufacturing methods for nearly a decade. According to GE, additive manufacturing allows design engineers to replace complex assemblies with single parts that are lighter. The use of 3D-printing methods accelerates design development and new product introduction times. Once more, GE is printing parts from materials such a cobalt-chrome alloy. In the case of the GE90 printed nozzle housing, the process from final design to FAA certification and service introduction spans what is described as six months.
In digesting this report, Supply Chain Matters further envisioned that the introduction of such 3D-printed aircraft engine components can significantly benefit both ongoing production as well as operational service parts needs. Instead of stocking global-wide manufacturing or service parts depot inventories, replenishment orders can trigger the printing of an additional part, with considerable inventory cost savings. In some cases, we would envision the part being printed directly at a regional repair and maintenance depot.
Next-generation additive manufacturing methods are indeed beginning to make a presence and the benefits described by global manufacturers such as GE, are indeed described as breakthrough technology.
Many of our Supply Chain Matters commentaries related to supply chain disruption and supply chain risk management relate to events that many would not believe would actually happen. This weekend featured the news that even iconic General Electric can be impacted by an unforeseen event, a devastating warehouse fire impacting a massive production facility.
Last Friday, a parts warehouse supporting GE’s home appliance factory complex in Louisville Kentucky was destroyed in a six-alarm fire. Nearly 200 firefighters battled the blaze and as of this writing, local news media reports indicate the hot spots remain. Luckily, there were no injuries since most employees had taken time-off for the Good Friday religious observance. According to media reports, the fire in Building Six raged for hours and required evacuation of the entire 900 acre Appliance Park factory complex. GE has since decided to suspend all production for at least a week while assessment of overall damage to operations and contingency plans are completed.
Appliance Park produces dishwashers, refrigerators, washing machines among other consumer appliances. Already, GE officials have indicated that an alternate space for the Building 6 warehousing operations has been identified and it does not anticipate any disruption for customers. A Wall Street Journal report quotes a labor union spokesperson as indicating that adequate inventory is available at an adjacent distribution center. These are obviously a timely business continuity response.
Ironically, GE had previously agreed to sell its home appliance business to Europe-based Electrolux for a reported $3.3 billion. The deal was expected to close later this year.
Generally, past events of this nature often provide a different picture once full assessments are completed. In the case of this warehouse destruction, assessment will focus on both product manufacturing and service parts supply chain needs. However, manufacturers such as GE have made investments in business continuity response and supply chain risk mitigation.
More news should be forthcoming in the coming weeks.
There has been a new development regarding the ongoing large number of product recall activities involving suspected automobile defective airbag inflators produced by supplier Takata Corporation.
The Associated Press is reporting that rival Japan based airbag inflator supplier Daicel Corporation announced last week that it will accelerate the building of a second U.S. factory in Arizona to meet the growing demand for alternative capacity for these components. This supplier, responding to specific requests from Honda Motor for an alternative supplier, and expects to start operating the Arizona facility by March of 2016. According to this report, Daicel has further plans to increase production of inflators at its existing factory in Western Japan to supply additional replacement parts later this year.
This is an obvious sign that alternative component supply arrangements are being initiated as Takata continues to struggle in resolution of current component needs.
An interesting news release came across our Supply Chain Matters news feed last week, one that perhaps demonstrates the broad capabilities of certain contract manufacturers within the automotive and truck sector.
Mercedes Benz’s U.S. entity and AM General LLC jointly announced that because of the increasing demand for the Mercedes Benz R-Class luxury vehicle, and the subsequent need for increased capacity, that the luxury sports utility vehicle would now be moved from the Mercedes U.S, Tuscaloosa Alabama facility and instead be manufactured at AM General’s commercial assembly plant in Mishawaka Indiana. Under this multi-year agreement, AM General becomes Mercedes first and only contract manufacturing operator within the United States. The R-Class vehicles manufactured and assembled by AM General are expected to roll-off its assembly lines this summer.
According to its web site, AM General designs, engineers, manufactures supplies and supports specialized vehicles for commercial and military customers. The manufacturer claims more than six decades of experience meeting the changing needs of the defense and automotive industries with a legacy of product innovation. In addition to its manufacturing capabilities, the company further provides support in service parts and integrated logistics as well as supply chain management.
AM General’s business units include three wholly owned subsidiaries, diesel engine manufacturer General Engine Products, automatic transmission manufacturer General Transmission Products, and Mobility Ventures which is the prime recipient of the contract manufacturing agreement. However, this manufacturer would best be known by U.S. and other military veterans as the original designer and manufacturer of the famous HMMWV (Humvee®) troop transport vehicle.
AM General’s Mobility Ventures produces the iconic HUMMER® H1 and H2 branded vehicles, along with specialized wheelchair accessible vehicles for public and private transportation. As a result of the new partnership with Mercedes Benz USA, the manufacturer further announced the hiring of two new senior executives, a new business unit President and an executive vice-president engineering, sales, distribution and dealer support.
The multi-purpose manufacturer claims more than six decades of experience meeting the changing needs of the defense and automotive industries with a legacy of product innovation. In addition to its manufacturing capabilities, the company additionally features specialized support in service parts and integrated logistics as well as supply chain management.
We at Supply Chain Matters could not help but think about the contrasts related to this announcement. Picture the Humvee or H1, (pictured above) the embodiment of rugged, tough and explosive-proof, being produced in the same facility as a luxury SUV with all the driver and passenger creature comforts. That is quite a contrast.
Then again, it could provide a testimonial to the notions that product design integration and contract manufacturing services can co-exist among various purpose-built vehicles.
In late 2010, Supply Chain Matters introduced our readers to Paris based Lokad, a rather unique technology services provider which at the time we coined as mathematicians on-demand. After our initial briefing with Founder Joannès Vermorel, we came away with an impression that industry supply chain teams had an interesting and somewhat cost affordable alternative in generating much more sophisticated timely and accurate forecasting techniques.
The company differentiated itself on the sophistication of its staff of highly trained mathematicians who take on challenges reflected in difficult forecasting problems. Customers are provided alternatives in loading product demand data “as it is” via the cloud, leveraging a Microsoft Azure platform, avoiding the need to perform tedious data formatting and pre-analysis. Vermorel and his team described themselves as rather pragmatic in the view that the goal is not to have the most accurate forecast, but rather a more automated means to determine the best response to fulfilling product demand under challenging constraints.
We checked-in with founder Vermorel in 2013 to learn about Lokad’s diversification efforts in quantile forecasting services and supporting software. As opposed to deterministic or mean-driven forecasts where respective forecast weighting are averaged, quantile forecasts introduce a purposeful bias in the forecasting algorithm and can be viewed as a stochastic method for forecasting. Our 2013 briefing notes reflected that Lokad continued to test its quantile methods on many industry verticals including the production of auto parts, electrical supplies, textile products, spare parts and packaging materials. Lokad consultants work with customers to fully understand their planning needs and develop a more sophisticated planning approach utilizing their cloud-based software platform.
A lot has occurred in advanced supply chain planning methods since 2010, most notably the notions of predictive and/or prescriptive analytics being applied to supply chain product demand and resource needs. The demand for trained individuals in analytics and Big-Data analysis in-fact has become so intense, that we called our readers attention to a Wall Street Journal report in August of last year indicating that one of the hottest jobs in tech was that of a data scientist. The WSJ noted that in certain cases, data scientists were commanding $200,000 – $300,000 annual salaries due to the shortage of such skills. Many supply chain teams as well as business teams would view that full-time expense as expensive or burdensome.
Kicking off 2015, we were thus very eager to include a check-in again with Lokad.
To little surprise, we learned that the company has now positioning itself as “Quantification Optimization for Commerce” and has since moved into offices twice its original size. The technology provider has now amassed hundreds of customers, has branched into a number of quantitative services and has developed its own next generation programming language specifically for supply chain planning and forecasting needs. We were informed of the firm’s first 7 figure engagement and its efforts to dive far deeper into challenging and industry-unique supply chain planning challenges.
What is rather unique and refreshing is that Lokad continues with its model of on-demand mathematicians providing ongoing analytical services for clients periodically during any given year. The Lokad cloud-based forecasting engine generates product forecasts predicated on probabilities and a range of predictions predicated on operational business metrics and/or operational risks. The explosion of Omni-channel commerce in retail sectors has especially fueled such needs and requirements as well as the unique needs of service focused supply chains related to highly sophisticated equipment.
We explored some current observations regarding the state of certain industry forecasting, specifically that Lokad has amassed over hundreds of engagements, The provider continues to observe fixed vs. fluid or more agile focused assumptions related to planning. For instance, top management at some firms has not taken the time to change inputted assumptions related to the cost of capital. A forecasting model for a U.S. firm continued to run with the assumption of a 6 percent cost of capital when cash is available at a far lower rate. Such a rigid assumption can often derail the accuracy of more predictive decision-making methods.
Our briefing included an in-depth discussion on the current state of Big-Data and predictive analytics initiatives across various industry settings. Vermorel apparently shares in our belief and prediction that many initiatives can well be de-railed in the coming months and years because of a lack of proper design. According to Vermorel, they include a “naïve rationalism” and actually fail at truly capturing the true drivers of the business and of the supply chain.
This author was so captivated by these observations that we extended an invitation for a Supply Chain Matters guest posting so that our readers can specifically learn from such observations.
Thus, what follows this updated commentary on Lokad is Founder Joannes Vermorel’s gracious guest posting, The Challenges and Obstacles of Big Data and Analytics Applied in Supply Chain and Commerce Decision Making.
We sincerely thank him for his contribution and insights.
© 2015, The Ferrari Consulting and Research Group LLC and the Supply Chain Matters blog. All rights reserved.
Automotive Service Networks Response to Crisis: Update Three- Expanded Recall Involving Suspected Defective Air Bag Inflators
Supply Chain Matters provides another update to the ongoing crisis involving the automotive industry as unprecedented levels of product recalls continue to stress auto aftermarket service supply chains to their limits. In our last commentary, we noted the colliding forces of regulatory, political, and capacity-restrained automotive replacement spare parts networks may well continue for many more months, and that appears to be exactly what continues to unfold. Once more, when the dust settles, we believe that the industry needs to take a hard look at lessons learned.
This week, there were further significant developments related to recalls of alleged defective airbag inflators produced by Japan based supplier Takata. After undergoing additional scrutiny from U.S. regulators, Takata refused to broaden the scope of the defective inflators recall beyond a select number of U.S. States with high humidity concerns. That action forced OEM Honda, to expand its U.S. recall of suspected defective airbag inflators to all 50 U.S. states. Once more, Honda further indicated to U.S. regulators that the company is in discussions with other air bag suppliers to add augmented capacity of replacement parts. According to published reports, Honda is in discussion with suppliers AutoLiv and Daicel Corp. for supplementing supplies of required repair parts. In testimony this week, a Honda executive confirmed what Supply Chain Matters indicated several weeks ago, that the shortage of repair replacement parts would continue for quite some time.
U.S. regulators continue to pressure OEM’s BMW, Chrysler, Ford and Mazda to expand their driver-side air bag recall campaigns to include all 50 states. These actions have been prompted by additional information disclosed this week by the U.S. National Highway Traffic Safety Administration (NHTSA) indicating that prior incidents of premature exploding airbags are not just occurring in high-humidity areas. That is new information not brought forward previously. If these other OEM’s expand their campaigns to include all U.S. states, that will of-course add even more concerns to the ultimate availability of replacement parts.
According to a published report by The Wall Street Journal, earlier in the week Takata issued a letter to the NHTSA challenging the authority of that agency to compel a parts supplier to initiate a recall, arguing that the U.S. regulator authority is limited only to actual OEM’s that produce automobiles. From the lens of Supply Chain Matters, that argument is tantamount to a supplier throwing its major automotive OEM customers under the proverbial bus.
There should be little doubt among automotive line of business and supply chain leaders that these past few years of unprecedented product recalls are cause to revisit product quality imperatives. There has been a lengthy industry debate as to whether the quest for volume and profitability growth sacrifices quality conformance across the end-to-end supply chain. On the positive side, Hyundai recently scaled-back its volume growth plans when indicators of slipping quality motivated senior leadership to cut-back growth plans and endorse added quality measures. The fact that Honda, which has prided itself in the quality image of its products is now front and center in the media is a symptom. In contrast, reports in business media of late question whether Toyota or General Motors have been chasing volume and profitability growth with quality and brand image as a casualty.
Evidence of common defective parts among multiple OEM brands and models point to shortfalls in quality monitors and component sourcing strategies that balance quality conformance risks. At the surface, these developments are perhaps a further indication that teams are not collecting or monitoring correct data as to component failure trends along with predictive indicators of broader manufacturing or material issues. The industry needs to take a hard look at supply-chain-wide quality conformance and feedback mechanisms.